Whether you like it or not, tax season is upon us. Really, you should be thinking about your taxes all year long. But once the New Year comes around, it’s time to start doing some personal tax preparation. April 15th is just a few months away, and the gap closes with each passing day. With this in mind, we’ve laid out a few things you should be doing now to prepare for Tax Day.
Review Your Last Tax Return
One of the most helpful things you can do to prepare for Tax Day is simply reviewing last year’s return. A little bit of introspection can go a long way toward helping this year’s tax filing process go more smoothly.
People tend to have a lot of anxiety about filing their taxes, and some of it is justified. But often, it’s mostly in your head. By the same token, though, see if you can remember what was challenging or anxiety-inducing about last year’s return. See what you can take away from that experience so that, this year, you don’t run into the same issues again.
Re-Evaluate Retirement Plans
One of the best ways to save money come tax season is by making smart investments in your retirement savings accounts. This is a way the government has of incentivizing the workforce to invest in their retirement.
Even if it’s too late to make adjustments to your 401k contributions, now is a great time to decide if you’d like to do so next year. If you have a traditional IRA, keep in mind that you can continue to contribute all the way up until Tax Day—so long as you haven’t met your contribution limit.
Gather Receipts from Tax-Deductible Expenses
Do you frequently spend money on tax-deductible items? If so, you should be saving your receipts. When it comes to tax-deductible expenses, you have to act as your own bookkeeper. Living in the internet age, things have been made much easier with the advent of e-receipts. This is especially true in 2020, when a majority of commerce took place online. But in this day and age, even local restaurants might send you e-receipts.
It’s challenging to stay organized during the chaos of the year. Paper receipts in particular are challenging to keep track of. But when it comes to documenting tax-deductible expenses, remember that organization is absolutely crucial.
Tax season can be hectic, but it doesn’t have to be. With these tips in mind, we hope you can maximize savings and minimize stress as you prepare for Tax Day.
Contact Bowman & Company Today
Bowman & Company CPA, PC provides all of our individual and small business customers with experienced, accurate, and affordable financial services. Our financial services aim at decreasing your taxes and increasing your net worth through responsible, timely, and accurate record keeping. We offer our services to clients throughout the Washington, D.C. metropolitan area including Maryland and Baltimore County, Columbia, and Howard County. For more information on our offerings, contact us online or call us at (410) 381-8121. You can also find us on Twitter, Linkedin, Facebook, and Youtube.